USDF Consortium launches to develop and promote bank-minted stablecoin
A consortium of US financial institutions has launched to develop a bank-minted stablecoin – USDF – to “unlock the financial opportunities” of blockchain technology.
The USDF Consortium was founded New York Community Bank (NYCB), NBH Bank, FirstBank, Sterling National Bank, and Synovus Bank, alongside fintechs Figure Technologies and JAM FINTOP.
Figure CEO Mike Cagney says: “USDF opens up endless possibilities for the expanding world of DeFi transactions.
“The ease and immediacy of using USDF for on-chain transactions was demonstrated this fall when NYCB minted USDF used to settle securities trades executed on Figure’s alternative trading systems.”
The Federal Deposit Insurance Corporation (FDIC) insured financial institutions intend to build a network of banks to “remove friction” in the financial system and speed up the adoption of blockchain and digital transactions.
USDF, a bank-minted alternative to non-bank-issued stablecoins, will be minted exclusively by US banks and will be redeemable on a 1:1 basis for cash from a Consortium member bank.
The group says an increasing number of customers are demanding access to blockchain transactions and the benefits and security it can provide.
It’s hoped that USDF will maintain consumer protections and address regulatory concerns of non-bank issued stablecoins, offering a more secure option for transacting on blockchain.
“Our membership in the Consortium will enable us to integrate real-time payments into our operating model, allowing us to leverage the benefits of blockchain technology to streamline multi-party decisioning processes and provide certainty of settlement,” says Sterling National Bank’s chief financial officer, Bea Ordonez.
USDF operates on the public Provenance Blockchain, which means that USDF can be used for peer-to-peer (P2P) and business-to-business (B2B) money transfers, capital call financing and invoice and supply chain finance.
NBH Bank’s chief digital officer says the USDF Consortium will allow banks of all sizes, including community banks, to provide digital banking solutions that more and more of its clients expect.
The Consortium says it intends to grow its membership of FDIC-insured banks this year.